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Assume that an investment of $3000 earns an APR of 6% compounded monthly for 18 months.

How much money is in your account after 18 months?

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Answer:

$3281.79

Explanation:

The compound interest formula is ...

A = P(1 +r/n)^(nt)

where A is the balance resulting from investment of P at annual rate r compounded n times per year for t years.

We have P=$3000, r=0.06, n=12, t=1.5, so the account balance is ...

A = $3000(1 +0.06/12)^(12·1.5) = $3000(1.005^18) ≈ $3281.79

There will be $3281.79 in the account after 18 months.

User Ken Bonny
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